Improving the bottom line with cabin class segmentation

Matching travellers expectations with further product offerings

Mobile phones, furniture, cars and many other goods today share one common feature, which is that they can be highly customized to match our individual expectations. This trend is also reflected in our travel behavior, where consumers also expect to have the right travel product meeting their criteria. Airlines have been attentive to this shifting behavior and have been adapting their product offering, namely by unbundling and through a finer segmentation of their cabin classes.

This latter point is typically achieved by increasing the number of cabin classes on-board. This trend is mostly visible through the explosion of Premium Economy and Economy Plus products over the last decade. As shown in the diagram representing the A380’s segmentation potential, each cabin class is tailored for a specific passenger need. It can range from basic comfort needs for an Economy passenger to the outstanding luxury, privacy and service offered in First Class.

This fine level of segmentation also brings airlines financial advantage, since each class has its own specific price point and allows upselling to passengers who previously could not afford a more premium product, but still seek more comfort. Airbus research shows that the revenue generated by premium products, such as Premium Economy, generate more revenue per unit of surface used than Economy, thus bringing a true gain to an airline’s bottom line.

Nevertheless, the challenge that airlines face when upgrading their cabins to increase segmentation is capacity reduction, thus increasing the risk of passenger spill. On high-traffic routes, this drives the need towards ever-larger aircraft, such as the A350-1000 or A380, to ensure a good match between supply and demand. The A380 brings significant advantages. Thanks to its spacious cabin and its two decks, the aircraft allows airlines to offer highly segmented cabin layouts while keeping a seat count of close to 500 seats.

For more information contact:
Antonio da Costa
Head of A380 Product Marketing
antonio.t.da-costa@airbus.com